Greek residential property prices fell at a faster pace in the third quarter compared to the previous three-month period as economic contraction hit household income and employment, knocking values on banks' outstanding real estate loans.
Property accounts for a large chunk of household wealth in Greece, which has one of the highest home ownership rates in Europe – 80 percent versus a European Union average of 70 percent, according to the European Mortgage Federation.
Bank of Greece data showed apartment prices fell by 6.1 percent in the third quarter of 2015 from a year earlier, with the annual pace of price declines accelerating from 5.0 percent in the second quarter.
The price slide had started to ease after a 10.8 percent fall in 2013 up until the first quarter of 2015.
Greece's real estate market has been hit by property taxes to plug budget deficits, a tight credit market and a jobless rate hovering around 25 percent. Residential property prices have dropped by 41.2 percent from a peak hit in 2008, when the country's recession began.
Greece has been pushed to the brink of default by a debt crisis that at one stage put into question its membership of the eurozone single currency bloc. Its economic prospects have improved after it signed up to a new bailout package worth up to 86 billion euros this summer.
Apart from their negative effect on wealth, falling property prices also affect collateral values on banks' outstanding real estate loans. Greece's economy shrank 0.5 percent in the third quarter compared with the first three months of 2015, contracting by a milder-than-expected pace.
The European Commission projects Greece will see a 1.4 percent recession this year, but the left-wing government expects the 173 billion euro economy to flatline. [Reuters]